1. We buffer calls to setState() and apply them all at once (they don't trigger re-renders) and mark those components as dirty. Then we sort by the depth in the hierarchy and reconcile them. Reconciling removes the dirty bit, so if we come across a node not marked as dirty we don't reconcile (since it was reconciled by one of its parents).

2. I don't think we spend a lot of time trying to make this super optimal, but git grep ReactMultiChild to see what we do.